To what extent is China reshaping the Asia-Pacific geopolitical order through its external investments? We provide a novel basis for answering this question by examining the destinations of China’s outward FDI. We posit that China’s political and economic regimes have made the general geopolitics of FDI insufficient to predict these destinations. Furthermore, existing studies have oversimplified China’s endeavors to build its own desired geopolitical networks and paid scant attention to the security aspect of geopolitics. To address these issues, we propose new arguments and test them both quantitatively and qualitatively. We find Chinese outward FDI to be more likely to increase in foreign states that have close political affinities with either China or the United States and less likely to increase in those that are relatively neutral. We also find that foreign states tend to tolerate security concerns about China until they reach a certain threshold. These findings are valid not only globally but also regionally when we focus on Asia-Pacific middle powers. Overall, we provide ground for advanced research on China’s pursuit of international influence through its outbound FDI. We also pave the way for future discussions of the implications of economic statecraft on the Asia Pacific.
